Centralized, Legacy System Entry Barriers Pose Risks to Apple Pay, Mobile Payments

Like Google and others before it, the gravitas behind Apple Pay has failed to win over the consumer industry before consumers themselves even begin to consider melting down their plastic.

With news that Walmart and Best Buy will not be jumping onboard Apple Pay, and competitor CurrentC making advances, is this just another false start for digital and mobile payments?

The answer could well make for lackluster reading. For a comparison between Apple Pay and CurrentC, which has the backing of Walmart, Shell, Southwest Airlines and 7-Eleven among others, highlights neither system’s ability to encompass everything the consumer and retailer require.

Apple’s offering allows customers to load a credit or debit card onto their IPhone, which is not the case with CurrentC, which provides only cash or bank transfer options. However, the cost to merchants of installing the technology needed to accept Apple Pay (around US$500 plus any maintenance) makes it prohibitively expensive to smaller retailers. CurrentC is simply an app, which is both inexpensive to set up and allows retailers to bypass card processing fees.

If this makes Apple Pay still sound like the more sensible option in terms of consumer flexibility, another hurdle to overcome is that the service only works with the iPhone, as opposed to CurrentC which supports any smartphone.

“While these two platforms are big enablers that does not automatically guarantee success,” Rajesh Kandaswamy, a research director at Gartner told the Washington Post. “We still need to see whether consumers will find the value proposition enough to start using the system.”

It would seem, then, that current situation is something of a patchwork elephant which will undoubtedly not bode well for providing the ‘payments revolution’ so many have touted.

Meanwhile, both sides are busy drumming up support among their allies, which in Apple’s case are the banks and credit card companies.

“There are schemes that don’t respect and honor the payment networks,” James Anderson, senior vice president for mobile product development at MasterCard told Dispatch.com. “We want to invest in programs that respect our role in the ecosystem.”

This ‘role’ is of course as lucrative the world over as it is in the US, meaning future partnerships with national banks will most likely not be a hard sell. CurrentC, in its avoidance of banking fees, could well end up being placed with digital currencies as an unwelcome (read: insignificant) presence on the market by banks, but welcomed by retailers.

“Apple did not do anything 'amazing' by developing Apple Pay. They're just so big that they can get it implemented into a lot of companies in a very short term,” Orillia’s Filip Roose told Cointelegraph via Facebook. “And that is about the only advantage on their hand.”

Nevertheless, when it comes down to the crux, the consumer industry may still be abiding by the same old rules. The new breed of contactless payment methods should have pushed security concerns to the fore, and Apple’s record in this respect is far from unblemished. However, as Ars Technica notes, this is not what the potential user actually values above all else.

 “…As decades of sign-and-swipe magnetic stripe card use has proven, convenience rather than security is one of the most important factors in getting consumers to adopt a new payment technology,” it writes, adding that “whether Apple Pay is secure or not may be irrelevant unless a massive and well-publicized breach occurs.”

For retailers, it would not be the first time that a more expensive technology ushers out the existing one. A good example of this is the introduction of Visa Debit to Philadelphia in 1997, which replaced the MAC cards which had operated since the 1980s.

“Bankers agree that MAC is quicker, cheaper and safer than the Visa debit-card system that's replacing it. But Visa is far more versatile for the con